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Business: Asian shares rally on jobs data, despite trade talks impasse

SINGAPORE (AP) — Asian stock indexes rose Monday as investors rallied around a U.S. jobs report, despite fresh signs of a burgeoning trade war as weekend China-U.S. trade talks ended in an apparent impasse.

KEEPING SCORE: Japan’s benchmark Nikkei 225 index rose 1.4 percent to 22,481.64 and South Korea’s Kospi gained 0.3 percent to 2,446.77. Hong Kong’s Hang Seng rallied 1.3 percent to 30,889.91 and the Shanghai Composite index rose 0.2 percent to 3,081.77. Australia’s S&P/ASX 200 gained 0.6 percent to 6,025.00. Taiwan’s benchmark rose and Southeast Asian indexes were mostly higher.

WALL STREET: Major U.S. benchmarks finished higher on Friday. The S&P 500 rose 1.1 percent to 2,734.62, and the Dow Jones industrial average gained 0.9 percent to 24,635.21. The Nasdaq composite jumped 1.5 percent to 7,554.33.

MORE U.S. JOBS: U.S. employers added a robust 233,000 jobs in May, up from 159,000 in April, helping to drive the nation’s unemployment rate to an 18-year low of 3.8 percent. “The May jobs report revealed impressive strength and breadth in U.S. job creation that blew away most economists’ expectations,” said Scott Anderson, chief economist at Bank of the West.

CHINA’S WARNING: Raising the likelihood of a trade war, China said Sunday that it won’t step up purchases of American products if President Donald Trump taxes billions of dollars’ worth of Chinese imports. In May, China had promised to “significantly increase” its purchases of U.S. farm, energy and other products. Treasury Secretary Steven Mnuchin said then that the U.S. tariffs were suspended and the trade war “on hold.” President Trump has since renewed his threat to impose 25 percent tariffs on $50 billion in Chinese high-tech goods.

QUOTEWORTHY: “The weekend has produced no positive trade developments and a few more negative ones. The world stands on the brink of a trade war,” said Robert Carnell, chief economist and head of research, Asia-Pacific at ING Bank.

NORTH KOREAN SUMMIT BACK ON: After a week of hard-nosed negotiations, diplomatic gamesmanship and no shortage of theatrics, President Donald Trump announced Friday that the historic nuclear-weapons summit he had canceled with North Korea’s Kim Jong Un is back on. The June 12 meeting in Singapore, the first between heads of the technically still-warring nations, is meant to begin the process of ending North Korea’s nuclear program.

ENERGY: Oil futures dipped on speculation that OPEC countries may decide to raise supply at a summit later this month. Benchmark U.S. crude fell 4 cents to $65.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.23 to settle at $65.81 per barrel on Friday. Brent crude, used to price international oils, fell 26 cents to $76.53 in London.

CURRENCIES: The dollar rose to 109.63 yen from 109.52 yen in late trading Friday. The euro strengthened to $1.1696 from $1.1662.

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Investing.com – Here are the top five things you need to know in financial markets on Monday, June 4:

1. Dow Futures Rise 150 Points

U.S. stock markets looked set to start the week on a firmly positive note, with investors using last week’s robust U.S. jobs report to drive markets higher.

At 5:40AM ET, the blue-chip Dow futures were up 150 points, or about 0.6%, while the S&P 500 futures tacked on 12 points, or nearly 0.4%.

The tech-heavy Nasdaq 100 futures indicated a gain of 35 points, or roughly 0.5%, which would put the benchmark on track to test its January record high of 7,588 points.

Wall Street stocks rose on Friday after the latest monthly jobs report pointed to strength in the U.S. economy, with technology stocks leading the rally.

There is no major economic data on today’s calendar, with only a report on factory orders due at 10:00AM ET (1400GMT).

The earnings calendar will be fairly quiet with no major companies set to report results, though investors will get quarterly updates from Dell Technologies (NYSE:DVMT), Palo Alto Networks (NYSE:PANW) and Coupa Software (NASDAQ:COUP).

2. China Warns The U.S. On Tariffs

China warned the United States on Sunday that any agreements reached on trade and business between the two countries will be void if Washington implements tariffs and other trade measures, as the two ended their latest round of talks in Beijing.

The world’s two largest economies have threatened each other with tens of billions of dollars’ worth of tariffs in recent months, leading to worries that Washington and Beijing may engage in a full-scale trade war that could damage global growth and roil markets.

With a lack of major economic reports and earnings news, markets could focus more heavily on trade-related headlines in the coming week as President Donald Trump prepares to meet world leaders at the G7 summit in Canada.

3. Dollar Pushes Lower As U.S-China Trade Tensions Weigh

The dollar started the week lower, after weekend talks between the U.S. and China on trade ended without a breakthrough, raising the danger that negotiations could collapse.

The dollar index was off almost 0.4% to 93.76.

There are no Federal Reserve speakers in the coming week since it is the quiet period ahead of the June 12-13 Federal Open Market Committee meeting, when the Fed is widely expected to raise interest rates.

The U.S. central bank is increasingly likely to raise rates a fourth time this year after last week’s employment report showed U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8%.

The U.S. Labor Department’s report also showed solid wage gains, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation.

4. Oil Prices Stay Under Pressure

Oil prices got the week off to a lackluster start, as rising U.S. crude production and expectations that OPEC members will raise supplies remained in focus.

U.S. West Texas Intermediate WTI crude was down 12 cents, or 0.2%, at $65.69 a barrel, sitting around its lowest since April 11.

Brent crude futures were down 35 cents, or around 0.5%, at $76.43 a barrel.

Prices have struggled in recent sessions on concerns that the Organization of the Petroleum Exporting Countries and non-OPEC members led by Russia would pump more crude, even as U.S. oil output rises.

Meanwhile, Brent’s premium over WTI futures remained near three-year highs above $10 a barrel. The premium has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.

5. European Markets, Euro Boosted By Easing Political Risks

European financial markets extended their recovery rally, boosted by signs of easing political risks in Italy and Spain.

The pan-European Stoxx 600 was up around 0.5% during mid-morning trade, with all sectors and major bourses in positive territory.

Among national indexes, Italian and Spanish equities were the top gainers, having suffered a week of heightened uncertainty as Italian parties negotiated a government and Spain’s Prime Minister was ousted.

Meanwhile, the euro tacked on 0.6% against the dollar to 1.1731 (EUR/USD), well clear of last week’s 10-month low of 1.1506.

In a further sign of the calmness that has returned to the market, the spread on Italian and Spanish bond yields over benchmark German Bunds narrowed sharply.

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